​​​​​​​​​​​​​​​​​​​​​Impact of recent changes pertaining to trusts and foundations in Mauritius. 20 October 2021

Synopsis

The Mauritius Finance Act 2021, which was recently enacted, provides several tax incentives in terms of double deductions, tax holidays and tax credits, which are welcomed in the given climate.

On the other hand, the repeal of the tax exemption for trusts and foundations came as a surprise to the industry. In brief, the Act provides that trusts and foundations established from 30 June 2021 onwards will no longer be able to avail from this exemption by filing a declaration of non-residence. Those set up before 30 June 2021 have a grandfathering period up to the year of assessment 2024-25.

Following the introduction of the Act, the Mauritius Revenue Authority issued a Statement of Practice after extensive discussion with industry stakeholders to ensure that the Mauritius trust industry remains competitive. The Statement of Practice clarifies the residency concern for trusts and foundations and restores the tax exemption status in certain circumstances.

• How do these changes impact the trust and foundation regime in Mauritius?
• What has prompted the Mauritius Government to repeal the tax exemption for trusts and foundations so suddenly?
• With these changes, does it mean that international clients wanting to set up in Mauritius have an additional burden to bear?
• Is the Mauritius IFC on a level playing field with other well-established trust jurisdictions?
• Are we seeing the end of fiduciary structures and private clients work in Mauritius?
• Will there be a complete overhaul of the Income Tax Act in relation to trusts and foundations to restore clarity?
• What is the way forward?